Chain of trade schools to disband

Saturday

Jul 5, 2014 at 12:01 AMJul 5, 2014 at 11:13 AM

Facing heavy losses and a crackdown by government agencies, Corinthian Colleges - one of the largest for-profit operators of trade schools and colleges - will largely cease operating under an agreement with the federal Education Department.

Facing heavy losses and a crackdown by government agencies, Corinthian Colleges — one of the largest for-profit operators of trade schools and colleges — will largely cease operating under an agreement with the federal Education Department.

Corinthian, which has about 72,000 students, will make arrangements in the next six months to sell almost 100 schools in the United States and Canada and close a dozen others, the company said in a statement late Thursday.

That seems to cover all of Corinthian’s schools, but the company left it unclear whether it would continue to exist in some form or retain any of its current programs.

Corinthian operates a campus under the Everest name in Gahanna, according to its website.

The agreement “provides a blueprint for allowing most of our campuses to continue serving their students and communities under new ownership,” said Jack D. Massimino, chairman and CEO of the company.

But the plan faces a major hurdle: finding buyers. College enrollment has been declining, particularly in the for-profit sector, and several other companies are having financial and regulatory troubles of their own.

When Corinthian shed four campuses in California last year, it had to pay another company to take them. Its other recent attempts to sell schools have found no takers; in some cases, it closed the campuses instead.

In the first nine months of its 2013-14 fiscal year, Corinthian reported a net loss of $94 million and a cash cushion that shrank to $28 million from $46.6 million. Its efforts to have students with poor credit borrow money from private lenders have resulted in especially heavy losses. Its stock, which had traded as high as $3.21 a share in early 2013, closed on Thursday at 28.4 cents.

California’s attorney general, Kamala D. Harris, sued the company last year, charging that it had lied to students and investors about job placement rates for its graduates and about its financial condition.

For months, the Education Department has demanded job placement data from Corinthian, to no avail, prompting the department to threaten last month to cut off federal money. Like other for-profit school chains, Corinthian relies overwhelmingly on government money.